The Game of Trading

How to Win The Game of Trading

This is a comprehensive read for anyone who is new to trading or is not profitable yet.
Read this before you touch any other note in the vault.

1. The Illusion of Profits

Most people start trading because they see others getting rich from it. They want to get rich fast. But trading is a zero-sum game — for every winner, there’s a loser.
📉 90-90-90 Rule: 90% of traders lose 90% of their money in the first 90 days.

2. What Do You Trade?

You can trade:

  • [[Equities]]
  • [[Forex (Foreign Exchange)]]
  • [[Commodities]]
  • [[Indices]]

If you trade:

  • Stocks → Understand [[Earnings & Reports]], use screeners.
  • Forex → Learn [[Interest Rates]], [[Inflation]], [[Geopolitical Risk]], [[Central Banks]].
  • Crypto → (Subjective) Driven mostly by sentiment. Proceed with caution.
  • Derivatives → Learn [[Options Greeks]] [[IV Crush]] [[Straddle]] [[Theta Decay]].

3. Leverage & Lot Sizes

Understand:

  • [[Leverage vs Effective Leverage]]
  • [[Lot Sizes]]
  • [[Margin]]
  • [[Risk Management]]

Example: XAU/USD dipped 13% in a day once. Know that before using leverage. Don’t let leverage become a death sentence. so a 1:8 Effective leverage will be good considering you have extra liquidity on the side incase of a margin call.

4. Strategy

You need one. No strategy = you are the liquidity.
Popular ideas:

  • [[Support & Resistance]]
  • [[Order Blocks]]
  • [[Inner Circle Trader (ICT)]]
  • [[FVG & IFVG]]
  • [[SMT]]
  • [[FIB Retracement]]
  • [[Price Action]]

Alpha decays. You need to adapt.

5. Win Rate & RR

At RR 1:2, even 35% win rate = profitable.
RR 1:10 = break even at 9.2%.
→ Use [[Risk Management]], track your Win Rate, keep logs.

6. Discipline

50% strategy, 50% discipline.
Limit:

  • 2 trades per asset/day
  • 5 trades total/day

Avoid:

  • Revenge trading
  • Overconfidence
  • Overtrading
    Set SL/TP and walk away. [[Trader Psychology]] is not optional.

7. Paper Trading

Practice for 4 months minimum.

  • Learn Stop Loss, Take Profit, [[Points and Pips]], [[Slippage]], Ticks
  • Observe FOMC or [[Earnings & Reports]]
  • Avoid trading the news unless you really know what you’re doing

8. Stop Loss

Your first and most important layer of [[Risk Management]].
Set one every time. No exceptions. TP is optional. SL is not.

9. Futures & Options

Primarily tools for [[Hedging]].
If you don’t know:

  • [[Rolling]]
  • [[IV Crush]]
  • [[Theta Decay]]
  • [[Options Greeks]] → Then you’re not ready.

Prefer Options > Futures due to flexibility and reduced obligation.
Also, expect:

  • 0.5% – 4% returns per week
  • Avoid FOMO, learn to wait for clean entries

10. Risk Management

Risk 0.5–1.0% per trade.
Once in profit:

  • Use trailing SL
  • Move SL to breakeven @ 50% to TP
  • Lock partial profit @ 80%

Track:

  • [[Drawdown]]
  • Max Risk
  • Equity Curve
  • Edge Attribution

Tools & Habits of a Pro

  • Prep 30 mins before open
  • Read 2 newsletters daily
  • Use ForexFactory or equivalent for calendar events
  • Set Alerts at price levels
  • Maintain a Trade Journal
  • Track your Stats and Edge

Advanced / Spicy

If you’re going to break rules:

  • Learn [[Straddle]]
  • Learn [[Hedging]]
  • Learn how [[IV Crush]], Delta, and Gamma work

Trade both sides of volatility, but know what you’re doing.

What You Still Don’t Know

“This is still not the full picture.”

Here’s what’s still coming:

  • [[Dark Pools]]
  • [[Broker Conflict Models]]
  • Taxes & Regulations
  • Fear & Greed Index
  • Overfitting
  • Lookahead Bias
  • Correlations
  • Price Manipulation
  • HFT Front Running
  • Kelly Criterion

Watch Youtube videos on each topic, learn for free, knowledge and information is out there. test it yourself and see if it works on a paper account. AND DO NOT BUY A TRADING COURSE, if a trader is successful enough they do not need to sell a trading course.

Next Step:

→ Jump to [[Master Index]] to begin the full Zettelkasten journey.